First-time homebuyers should take advantage of a new tax credit
included in the recently enacted Housing and Economic Recovery Act of
2008.

Applies to home purchases after April 8, 2008, and before
July 1, 2009.

Reduces a taxpayer’s tax bill or increases his or her
refund, dollar for dollar.

Is fully refundable, meaning that the credit will be paid
out to eligible taxpayers, even if they owe no tax or the credit is
more than the tax that they owe.

The credit operates much like an interest-free loan, because it must be
repaid over a 15-year period. So, for example, an eligible taxpayer who
buys a home today and properly claims the maximum available credit of
$7,500 on his or her 2008 federal income tax return must begin repaying
the credit by including one-fifteenth of this amount, or $500, as an
additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This
form, along with further instructions on claiming the first-time
homebuyer credit, will be included in 2008 tax forms and instructions
and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the
following questions and answers may help you determine whether you
qualify for the credit.